The Philippine Stock Exchange (PSE) has approved the initial public offering (IPO) worth as much as P27.3 billion to be launched by Megaworld-sponsored MREIT Inc. this September.
This will be the fifth real estate investment trust (REIT) to come to market after AREIT Inc., DDMP REIT, Filinvest REIT and RL Commercial REIT, and its public offering is the largest in the PSE’s pipeline so far.
Up to 1.078 billion existing common shares in MREIT will be sold by the REIT sponsor, tycoon Andrew Tan-led Megaworld Corp., with an overallotment option of up to 161.7 million shares, at a maximum price of P22 per share. The IPO price will be finalized on Sept. 9.
MREIT’s offering is scheduled to run from Sept. 14 until Sept. 20, while the shares will be listed on the stock exchange on Sept. 30, based on an offering circular issued by the PSE.
Upon listing, this will give the REIT vehicle of Megaworld, a leading office landlord in the country, a market capitalization of P55.71 billion.
Largest in SEA
The equity deal will bring at least 42.57 percent of MREIT’s stocks to public hands, which can increase to 49 percent if the overallotment option will be exercised.
Envisioned to be the largest REIT in Southeast Asia (SEA) in leasing footprint as more assets are infused in the future, MREIT’s current portfolio has 10 properties valued at P55.6 billion, with 224,430 square meters of leasable space in three of Megaworld’s most valuable townships: cyberpark pioneer Eastwood City in Quezon City, McKinley Hill in Taguig City and Iloilo Business Park.
MREIT’s assets include 1800 Eastwood Avenue, 1880 Eastwood Avenue, E-Commerce Plaza, One World Square, Two World Square, Three World Square, 8/10 Upper McKinley, 18/20 Upper Mckinley, One Techno Place, Richmond Tower and Richmonde Hotel Iloilo.
As an asset class, REIT gives investors the option to invest directly in the finished products that are already earning money—such as office units, hotels, shopping malls, residences for rent or even infrastructure ventures like toll roads and power plants—and not just in the property developer itself. This instrument is meant to attract investors because the Philippine REIT law of 2009 requires the distribution of at least 90 percent of income annually.
BDO Capital, Credit Suisse (Singapore Ltd.), UBS AG Singapore and DBS Bank are the joint global coordinators for the IPO. BDO Capital is the domestic lead underwriter.
In terms of revenues, the assets included in MREIT accounted for about 20 percent of Megaworld’s office rental revenues. Last year, its total office portfolio generated P10.4 billion in revenues.
MREIT plans to declare as dividends at least 90 percent to as much as 100 percent of annual earnings.
At the maximum price of P22 per share, dividend yield is estimated at 4.1 percent for fiscal year ending June 2022 and 4.5 percent for fiscal year ending 2023. Assuming a lower offer price of P20 per share, dividend yield is estimated at 4.6 percent for fiscal year 2022 and close to 5 percent for fiscal year 2023.